Featured Guest: Carolyn Johnsen

What she does:  CJ is a partner at Dickinson Wright in Phoenix, Arizona and spearheaded the formation of Dickinson Wright's Distressed Health Care Restructuring Group. CJ's experience includes creating complex plans of reorganization for multi-million dollar companies in a wide-range of industries, including healthcare, mortgage lending, and real estate among others. She has also guided numerous boards and senior managers in developing strategies and solutions for revising operations and restructuring debt to generate the emergence of a stronger business through bankruptcy, or to take advantage of acquisition and sale opportunities, including the application of bankruptcy procedures favorable to corporate securities regulation compliance. In addition, CJ has negotiated multiple multi-million dollar transactions with lenders, investment bankers and brokers, asset purchasers and sellers, and governmental agencies. CJ has published extensive writings and over 100 speaking presentations to educate clients, lawyers, accountants and corporate representatives on bankruptcy, restructuring, sales and acquisitions from a business perspective.

On risk:  "You have to get down to the business aspects of it [risk], it's in the health care space, it's no different than any other business in a way because it's a question of cash in and cash out. And the problem that's unique to the health care industry is just the enormous regulation and that makes it more difficult to predict … If you are looking at risk, you're looking at needing a business plan, just like any other business, you're going to need to know going in okay, what is A to B, what is the B? Here's A, we're sitting here today, where are we trying to be at B? … It's been a very difficult time risk-wise for health care because of those particular factors [labor shortages, labor costs, inflation, reimbursement fluidity], which probably every other business is suffering somewhat the same problems. But like I said, the risk all gets back to having a good game plan"

Transcript

Scott Nelson  0:01  
Welcome to The Risky Health Care Business Podcast, where we help you prepare for the future by sharing stories, insights, and skills from expert voices in and around the United States health care world with a mission to inform, educate, and help health care organizations and individuals, ranging from one doctor practices to large integrated systems and organizations throughout the dental, medical, and veterinary health care industry with risk, while hopefully having some fun along the way. I'm your host, Scott Nelson, a guy that grew up in Ohio and has been working all over the United States during my 20 plus year and counting career in the health care industry, with a commitment to accelerating health care performance through creativity, not just productivity. Let's dive in.

According to reporting from the early weeks of 2024, almost 80 healthcare companies filed for bankruptcy in 2023 across health care sectors such as hospitals, practices, pharmaceuticals, medical equipment suppliers, lab services, and senior care, including twelve hospitals and health systems, the highest number of filings since 2019. Hospital bankruptcy filings totaled 12 compared to a total of 11 filings from the previous three years combined. Overall, case volumes in 2023 were more than three times the level reported in 2021 and over 1.7 times that of 2022.  Financial distress was a factor in 28% of M&A transactions in 2023, up from 15% in 2022.

Health care businesses continue to face financial headwinds with capital market constraints, labor and supply cost pressures, and revenue pressure, among others.  Early predictions have 2024 beating the 2023 numbers due to those factors and ongoing results from the end of Covid-19 pandemic-related protections and stimulus funds.  While bankruptcy and restructuring are typically the result of financial distress, financial distress can be created by other issues such as poor management.  However, bankruptcy and restructuring can also be utilized proactively as a strategic tool to address risk.

Today I'm speaking with Carolyn Johnsen about bankruptcy and restructuring risk in health care.  CJ is a partner at Dickinson Wright in Phoenix, Arizona and spearheaded the formation of Dickinson Wright's Distressed Health Care Restructuring Group.  The Distressed Health Care Restructuring Group includes attorneys throughout the US practicing in the areas of health care, restructuring, insolvency and bankruptcy, finance, real estate, regulatory, litigation and tax, with extensive experience in health care turnarounds and restructurings, bankruptcy sales, mergers and acquisitions, health care related lending, issues related to leases, real estate and all related regulatory and compliance matters.

CJ's experience includes creating complex plans of reorganization for multi-million dollar companies in a wide-range of industries, including healthcare, mortgage lending, and real estate among others.  She has also guided numerous boards and senior managers in developing strategies and solutions for revising operations and restructuring debt to generate the emergence of a stronger business through bankruptcy, or to take advantage of acquisition and sale opportunities, including the application of bankruptcy procedures favorable to corporate securities regulation compliance. In addition, CJ has negotiated multiple multi-million dollar transactions with lenders, investment bankers and brokers, asset purchasers and sellers, and governmental agencies.

CJ has published extensive writings and over 100 speaking presentations to educate clients, lawyers, accountants and corporate representatives on bankruptcy, restructuring, sales and acquisitions from a business perspective.

Let's talk with CJ about bankruptcy and restructuring risk in health care. 

CJ, welcome to the show.

Carolyn Johnsen  3:43  
Hi, Scott. Thanks for having me. This is really a great topic I'm excited to talk to you about and so let's get to it.

Scott Nelson  3:51  
Great. Well, before we begin our conversation about risk in health care, I'd like to take a moment to talk about your background and your work as an attorney in the area of distressed businesses. What is a bankruptcy and restructuring lawyer, your work, and what do you do in and with health care?

Carolyn Johnsen  4:04  
Well, you know, it's kind of funny because I'm not very popular often at cocktail parties when people ask, well, what do you do? So rather than saying, I'm a bankruptcy lawyer, and of course they roll their eyes, I usually say I'm a restructuring lawyer, but it's kind of one in the same thing. I've been doing commercial bankruptcy for over 35 years here in Phoenix. I practice law with the law firm of Dickinson Wright. It's a large firm nationwide with 20 offices. But the Phoenix office where I practice is about 60 lawyers. I really do turnarounds and restructurings and bankruptcies for entities in a number of different industries. But I have found in the last few years, particularly right before the pandemic hit, that I kind of was carving out a niche in the health care space. And in fact, I actually, if you look at the Dickinson Wright website, you'll see that I have a distressed health care section and it kind of describes what what we can do in that space. I am, in addition to practicing law with Dickinson Wright, I also serve as a senior bankruptcy consultant for an entity called Crux Strategies. They're based out of Nashville, and they specialize in health care compliance, revenue operations, and that sort of thing. And I guess just to give your listeners an idea of the kind of cases that I have done, I've represented in several instances, groups of of creditors who, unfortunately are affected by a hospital's bankruptcy or a physician group's bankruptcy, and they get pulled in because they haven't been paid. And I represent those groups of creditors, often in in cases, chapter 11 type cases. And in fact, I was very fortunate that I was recognized nationally for the Turnaround Deal of the Year by two entities, the national Turnaround Management Association, and the M&A Advisor for health care and life sciences. And so that was a pretty nice honor. So that's kind of what I do. I also represent entities that might want to merge or acquire a health care related business. And sometimes bankruptcy is a really good tool to do that. And I know, Scott, we're probably going to get into that as we go through this. But that's one of the things I do want to stress that it's not just for financial distressed companies. It's also for companies that, you know, maybe they want to grow their business, or maybe, you know, I'm tired of doing this, I just want to sell my business. And bankruptcy can often serve as a really good tool to do that.

Scott Nelson  6:56  
We will definitely be getting into some of those topics. I want to start off with a terminology question. What do the terms distressed, insolvency, bankruptcy, and restructuring mean?

Carolyn Johnsen  7:06  
Well, let's start with restructuring, which is kind of just, you know, it's, it is what it sounds like. And it's, it doesn't involve a court proceeding. And it basically is a company that is experiencing some financial difficulty. And they want to go to their lender, for example, and say you know, this just isn't working. The revenues that we had three years ago when we signed up for this loan they're just not there. We've done everything to cut expenses, you know, what kind of relief can can you give us? And you basically restructure that debt facility. Or you may have a situation where your lease obligations are just not working as well as you thought. And you and you restructured that contract. So a restructuring is an out of court kind of procedure, if you will, whereby you just, you work with your creditors to try to give give you some financial relief. And as far as insolvency and bankruptcy, there's kind of a misnomer, that you have to be insolvent to file bankruptcy. That's really not accurate, you, you may not be able to pay your debts as they come due, which I guess is is one definition of insolvency, but you don't have to be on a balance sheet insolvent in order to file. And actually sometimes I have filed a company into a bankruptcy, that they're not insolvent. In fact, they're very solvent, but they just are in a cash flow situation that's just not working. And, and so that lender may be knocking on the door to foreclose on a piece of real property, and really if you can just buy some time to work that debt out, and where cash flows are going to increase, then you're not you're not insolvent, but you're in need of a bankruptcy proceeding. So I hope that kind of defines, you know, what that's like. And then of course, I might get into the kinds of bankruptcies that are available to, I think some of the people who would be listening here, and there are really three different kinds of bankruptcies that are available for either an individual or an entity. One, of course, is a Chapter 11. I think people you know, probably have heard of that. And it is a can be a reorganization, which basically does what I've just explained, is restructuring because you're taking debt that you owe, and you're kind of restructuring it and you're, you know, you're moving the chairs around and, and so that you can come up with a game plan that works for you as an individual or your company. There could be a liquidation through Chapter 11. But most people are trying to try to reorganize their businesses, they want to stay in their businesses, but if they don't, then a Chapter 7 which is a pure liquidation is available to them as well. There is a Chapter 7 liquidation, which is also available to businesses or individuals. And that is a pure liquidation but it's in the hands of a third party, a trustee. In a Chapter 11 typically there is no trustee. The entity or individual is in control of its assets. And they are the ones who are going to either restructure their debt, or they're going to liquidate and pay their creditors. In a Chapter 7, you basically hand the keys over to a Chapter 7 trustee, and he or she then liquidates the assets. Now, there's a different part of a Chapter 11 that Scott I want to talk to, to everyone about as we go through this. And it's a very, very valuable part of the bankruptcy code that was just started, right, right before the pandemic hit. And it's, it's basically a Chapter 11 on steroids, if you will, it's a very streamlined provision of the bankruptcy code designed to help small businesses reorganize or liquidate, mainly reorganize. It's called a Subchapter 5 and it is part of the Chapter 11 of a Chapter 11 proceeding, but it's less expensive, it's designed, as I said, for small businesses, small practices, small physicians practices, small hospitals. And it's a very, very valuable tool. So we can talk about that more after a while. But I just want to kind of wanted to give everybody an overview of what is available in the bankruptcy world.

Scott Nelson  11:42  
That's a really helpful overview and a good way to start. Is there a difference between a bankruptcy as a business versus as an individual? When you were talking about some of those different areas there, if a health care organization is owned by a doctor or a group of doctors or another entity, versus an individual that's in that business, are there any differences between those two? And does the businesses legal structure, such as the LLC or the S Corp, does that matter into the pieces that you just talked about?

Carolyn Johnsen  12:12  
It really doesn't Scott, you know, there are some tax situations that of course, arise that you know, throughout a sub S corp or an LLC, but as far as the bankruptcy itself, there's no restriction, there's no difference. A Chapter 7 entity or Chapter 11 entity does not actually get a discharge. But, boy now I'm really getting in the weeds there if I start talking about that. But what I think is important to know is that sometimes the entity like let's say it's a group, a physicians group, and they are an LLC, and the decision is made to file the LLC. Often, if the physicians themselves have guaranteed some of the debt, the bankruptcy does not prevent a creditor from going after that individual on his or her guarantee. So often, the owners themselves will end up filing a bankruptcy as well and you try to consolidate what's going on. That often happens, but not all the time.

Scott Nelson  13:16  
Well, personally, I had viewed bankruptcy as a reactive process, but from talking to you and listening to you now, it is recognized as a proactive strategic tool. How is it used for health care businesses?

Carolyn Johnsen  13:28  
Well, you know, I think, particularly in this market, and I just in fact, right before we we got on air here, I had another email come across that how many bankruptcies have filed in Texas, for example, there's, you know, so there's a lot of things in the, in the health care space, health care bankruptcies are filing. But I think what you're seeing in those bankruptcies is kind of a, I call it, you know, the moving the chairs around the deck. And it's a tool that can assist with a sale. So if the business is not doing well, in fact, Trinity Hospital out of Texas just sold, it's a 32 bed hospital in North Dallas. And it just sold for a really good price to HCA, which is based out of Nashville. And so that was a, a bankruptcy that was successful because it, it narrowed down the purchasers, it offers a way to, for HCA to take that business and get rid of some of the liabilities that are not helpful, and to reorganize some of the debt. And so that's a really good tool. The other kinds of things that I've seen in health care, and I've done a lot of this work, too, is you've got a practice, a physicians practice, for example, in one specific area, let's just say orthopedics just for example, and they kind of want to grow but they don't really have the ability to grow, but they can merge their practice with a larger group that has several orthopedic practices, you know, in other parts of the region or country. And that can be structured through bankruptcy. And in fact, we had a really successful one here that where I represented a small physicians hospital, and we ended up merging with a larger group. And it it was so successful, we not only paid creditors in full, which is unusual in a bankruptcy, we also had like a 13% return to equity. So that was a really successful way of using a bankruptcy tool to merge or, as I said, to be used in a sales situation.

Scott Nelson  15:42  
Thinking about health care in distress, as a risk or as an opportunity, how do you think about and view risk in health care?

Carolyn Johnsen  15:50  
Well, you know, risk is, I guess you kind of have to get down to the business aspects of it, you know, it's in the health care space, it's no different than any other business in a way because it's a question of cash in and cash out. And the only problem that's, you know, sort of unique to the health care industry is just the enormous regulation that it has to suffer through. And that makes it more difficult to predict. But if you can, just putting that aside for a minute, if you are looking at risk, you're looking at needing a business plan, just like any other business, you're gonna need to know going in okay, what is A to B? That's what I counsel clients the minute they sit down in my office, okay, what is what is the B? Here's A, we're sitting here today, where are we trying to be at B? Are we trying to restructure our debt? Are we trying to grow? Are we trying to shrink? Are we trying to have a succession plan? Because the head honcho here is not going to be around forever, who's going to take over the business? What are we, what are we trying to accomplish? So it's no different than any other business where you're trying to control what's going on in the business itself. Cash in, cash out. What are your, what's your revenue stream? What, you know, what, what is your employee, what's happening with your employees? Now, I will say this, Scott, I think what has happened, particularly since the pandemic, is that you've kind of got the the unfortunate perfect storm. Because you've got labor shortages and labor costs have just, you know, really had an effect in health care. You have inflation, that, of course, has had an effect everywhere, but particularly in health care. And then you've have this overlap of just the regulation that goes along with health care, you know, the No, the No Surprises Act was passed just recently. And that has affected the reimbursements for many health care entities. And you've got all this fluidity in what the reimbursements are going to be. So it's, it's been a very, a very difficult time risk-wise for health care because of those particular factors, which probably every other business is suffering somewhat the same, the same problems. But like I said, the risk all gets back to having a good game plan. And when you're talking about being proactive, it's being proactive and staying on top of what's going on with your revenue streams and your employees and that sort of thing.

Scott Nelson  18:43  
There’s been reporting in the first weeks of 2024 that 2023 was the biggest year for Chapter 11 bankruptcy filings in the past half-decade. Almost 80 health care companies filed for bankruptcy in 2023, the highest number of filings since 2019. Hospital bankruptcy filings in 2023 totaled 12 compared with 11 filings from the previous 3 years combined. Take me into those types of situations. Is there a tipping point or a point of no return where decisions must be made and actions must be taken? What are some of those decisions and actions?

Carolyn Johnsen  19:13  
Well, you know, yeah, well, I don't know that there's a tipping point. But I think there is some point where, you know, you really kind of do reach a point where this isn't working. We've now we've now cut labor, we you know, we've we've laid off as many people as we can lay off, we can't increase our revenue streams. How are we how are we going to do this? Where are we going to turn to to stay alive? And you basically have a you know, a couple of alternatives you you can file a bankruptcy to get rid of some of your debt. For example, as I was saying in the in this Trinity Hospital case, they will eliminate considerable amount of secure debt. That's an unusual situation because it was really large bond debt there, but, but it does have some, some value to talk about here. But you're able to get rid of some of your lease debt, some of your vendor debt, and and basically come out with a cleaner balance sheet or sell it or sell the business, which can be some a way to pay off creditors, a way to pay back investors in some in some circumstances. So it does work to resolve those kinds of issues. And let me just make one more comment on that, you know, part of the problem is you've got to be able to decide what, again, what you are trying to accomplish, what, what is your mission? Are you being just completely paralyzed because of your lease obligations. There was a case just filed in Phoenix yesterday or two days ago, it's a kind of a pain medication company sort of thing. At any rate, they, their problem is they had this, these leases that were just strangling them. And so they file bankruptcy and the whole point of the bankruptcy is to be able to relieve them of that. Bankruptcy has one very, very powerful tool. And it's called the rejection of contracts, executory contracts and leases, and it allows a company to essentially cancel a burdensome lease, and that there is that does generate debt for the company, but then you're going to pay that in a much smaller percentage than you would have to pay if you were at an ongoing lease that was just killing your business. So that's, that's one of those things that you have to determine when you reach that tipping point. And part of the tipping point too, is, you know, where am I getting hit my getting hit from the landlord? Am I getting hit from the lender? Am I getting hit from my vendors? Is bankruptcy really going to help me? Now from a vendor standpoint, you know, there you've got a problem of you've got vendors who you probably are, you know, overextended and bankruptcy may not help you with them because you need them. And they're not required to continue to supply you during bankruptcy. And so that can be an issue. You've got to be able to focus on where what am I trying to accomplish here and is bankruptcy really going to help?

Scott Nelson  22:42  
Thinking about bankruptcy and restructuring as a process with 3 phases where the first phase is the Before Phase, looking at items like revenue streams and expenses and taking action before reaching a difficult decision point; then the second phase is the During Phase, further actions are taken that could be legal and/or financial, for example debt restructuring or a business might be consolidated into another company through acquisition; and the third and final phase is the After Phase, where a business and owner have completed the full process and in the sale and purchase example the previous owner has likely exited the business. Is that a realistic approach for a health care business owner that is potentially facing a bankruptcy or restructuring situation?

Carolyn Johnsen  23:22  
Well, Scott, I think you're spot on, I think that is exactly the approach. First and foremost, you'll look at your other options because bankruptcy while it's not a stigma anymore, it's still a process. And it is expensive, no matter what you do. It's expensive, not only from the cost of it, but also from the the managers or management's time out of the office of doing what they should be doing. Their physicians or their managers, their administrators, they need to do their job not being messing around with a bankruptcy. So first and foremost, doing things that prevent a going into a bankruptcy are always advisable. And as you mentioned, cutting your costs, trying to increase revenue, and looking at those kinds of things that any business would look at. And only after that, and in that time, you know, people are going to be should be discussing with, you know, financial advisors or other advisers going through this process on what's you know, what are some of the best alternatives? And then particularly, in your second phase that you just described, yes, you need to decide, what am I trying to solve here? What are the, what are the problems I'm going to solve? And I need to talk to maybe a turnaround person, maybe a bankruptcy lawyer, maybe a financial person, or a strategic person, people who are involved in that business, such as yours Scott, that know what's going on, and can give you some some help about what will help and what will not help. And then, of course, the third phase is, and let me go back just one sec. As part of that second phase, when you're trying to decide what to do, it is helpful, because so many turnaround people, bankruptcy lawyers and strategic people, like you, are creative. And I'll give you just a really good example of how they can be creative. And they can solve everybody's problems without either with a bankruptcy or without. Had a situation where this hospital was in just deep trouble financially, weigh extended on debt, and so forth. And it just didn't know if it was going to be able to sell or not. But lo and behold, there was a building located next to that hospital facility that was pretty much empty. And so the solution that was and actually is kind of still being considered, why don't we talk to whoever owns that building and see if we can do something as a creative thing where you do you put physicians in that building, and then the physicians are going to use the hospital right next door to the building. So this is a real high level kind of hypothetical. But I think you see where I'm going, there's creative solutions to those kinds of things without just necessarily running into a bankruptcy or running into some kind of a restructure agreement with with various parties. That just, if you can just take a step back and say, you know, this might work, and the professionals who deal in the health care space, you know, they're used to that. And they're used to coming up with creative ideas. So I think that that's a good way to approach your second phase that you're describing. And then the third phase is, I guess, what happens if you do file bankruptcy, and I'm happy to kind of describe that process as well, if you'd like for me to.

Scott Nelson  27:02  
That would be very helpful. 

Carolyn Johnsen  27:03  
The process itself is it's it's not difficult to file the bankruptcy. But I guess it's annoying from the fact that there's so much paperwork that's involved, no matter whether it's a pure Chapter 11 or the Subchapter 5 that I was talking about earlier. There's a lot of paperwork. There's a lot of schedules to be filed. There's a lot of court interaction in terms of meeting with creditors and having to deal with just the nuances of the bankruptcy code. So it is time consuming and it can be expensive. The actual process for the person or entity that's filing, you know, it requires hands-on of providing information to the bankruptcy lawyer and bankruptcy counsel's financial advisor, which, typically when I file a bankruptcy, I usually hire a financial advisor to assist. But if the company or the individual has a financial advisor that that they use, or some a really competent CFO, then that works just fine, too. And so there's a lot of financial data that has to be provided. It's not hard, but it just takes time. The Subchapter 5 that I was explaining, is, as I said, designed for small businesses, there is a debt ceiling on it of 7.5 million. Now a small business probably is within that that parameter. And the benefit is that there's less paperwork, less things that have to be filing and it is a quicker process. A regular Chapter 11, you know, you may be sitting in bankruptcy for a year. Certainly, I don't think I've ever done one in less than six months, unless it's completely prepackaged. But that's unusual. So it's very time consuming. But and it does take its toll on management because they constantly have to be dealing with the issues of the bankruptcy itself. It's not a scary process. It's just sort of an annoying process in a way.

Scott Nelson  29:14  
I want to underline a comment and idea you shared about people working together to generate creative solutions.  I whole-heartedly support that sentiment.  What we are talking about today can be complex and complicated - the same can be said about so many things in health care.  When participants collaborate and work together to generate creative solutions many things can be accomplished.  Elaborate on the participants and resources involved in these efforts. Who are the people typically involved?  Who should be involved?

Carolyn Johnsen  29:41  
Well, I think I think pre bankruptcy or in the middle of a restructuring, I think financial advisors are good. And when I say turnaround people, you have to be a little careful because sometimes people will seem to sort of present themselves as, oh, yes, I've been in the turnaround world, and they really haven't. But in health care, I think it's more of a limited industry in terms of people who have actually been through restructurings, and actually have that kind of experience. They're very good sources, resources, as are financial advisors who are in that particular space, and there's all levels of those as well, from the really expensive ones, to the ones that are not so expensive. But I do think that that kind of advice is very, very helpful. And it may be, you know, most businesses have their accountants, and it may be that the their accountants, for example, have that kind of experience. It may be a strategic advisor that they've used in the past, and they may have that kind of experience, or they know somebody who does. I think that those kinds of advisors are very, very helpful. And of course, obviously, if you are going to approach a bankruptcy, I really strongly urge people to be very cautious about being sure that they have the kind of experience necessary in this kind of work. Unfortunately, I have seen some cases that just didn't have the expertise to do it, and you want to kind of stay away from that. But, you know, the court itself really is not involved there. They're there to kind of monitor and, and they really are going to force you to, you know, just stay within the parameters of the bankruptcy code. And but they really don't participate very much. There's another entity called the United States Trustee. And in a Chapter 11, they just kind of monitor the case. You know, one thing that is, I think people have to be aware of in a bankruptcy is, it's a very, it's very much like being in a fishbowl in a way, because everything has to be disclosed. So you know, it has, you have to be kind of careful there too, because some entities may may have not been operating completely aboveboard, or they may have been operating where they had problems with a manager or someone who was taking money out of the company. And those kinds of issues arise in bankruptcy frequently and it's a fishbowl. Everybody gets to see what everybody's doing. But that's where you need really competent counsel and really competent financial advice and really competent, strategic advice. I mean, that's what your company is all about. And that's what people need.

Scott Nelson  32:34  
Are there differences by state? Does a health care business in Arizona have a different set of laws compared to a health care business situated in the Midwest or Southeast or Pacific Northwest?

Carolyn Johnsen  32:45  
For bankruptcy, no, it's all it's federal law and it's the same everywhere. You will have local rules in individual courts. And I, for example, have restrictions of where I can practice, but I can usually hire local counsel and I can still file a bankruptcy, anywhere, pretty much. There are differences state by state in terms of the regulatory aspect, because every state has their own regulations. For example, we don't have Medicaid in Arizona, but we have AHCCCS, which is a similar program. So you have to, you do need to have somebody local, that's going to keep you within those boundaries. But passed that, like for example, my firm has a broad health care section and so we practice pretty much all over the country.

Scott Nelson  33:40  
Looking at today, as well as backward and forward from a macro view, we experienced an unexpected shock event back in 2020, the COVID 19 pandemic, and some reporting has noted the influx of government relief funding slowed or delayed closures and bankruptcy filings. From your perspective, what are the biggest challenges facing health care today related to insolvency and bankruptcy risk as either an opportunity or a risk? What could or should be done to plan and be prepared for that going forward?

Carolyn Johnsen  34:07  
Well, I think that's a good point about the you know, the effects of of what happened the pandemic and why it staved off a lot of bankruptcies that should have happened then. Because what happened, as we I think we all know, is there was a pretty broad government program that bailed out a lot of companies that probably were just on the edge of either filing bankruptcy or maybe even liquidating, but they were handed government checks, and so they were able to survive. But what happened is they didn't cure any of the problems that they already had. They just wrote those checks. And they didn't cure whatever management problems they had or whatever problems with landlords or vendors that they had this will not cure during that period. And that's right, it everybody started kind of filing when all that money ran out because those problems were never handled. And that's why you've seen just this incredible number of health care filings, particularly in the senior health care sections, senior living, assisted living, those entities have really suffered. And so have rural hospitals have really suffered. But that doesn't mean that a lot of other ones haven't either. And there are several, I think I just saw report, there were four in Texas that filed and they weren't all, particularly in that space, but they were experiencing the kind of problems that we've been talking about, that they should have been addressing, they should have had a better game plan, they should have had a better a better business plan. And that's what they should have done. And they weren't doing it. They weren't handling the problems. I had one case that the problem really was not a lack of revenue. They had a management problem that they just were not dealing with. And it was just poor management. And you know, so poor, poor cash management, poor everything management. So that was an issue. I don't know what to predict. I mean, I read the same reports that you probably do. Their predictions are that operating cash flow and margins are supposed to improve. Companies and individuals need to look at other alternatives such as sales, mergers and acquisitions, and bankruptcy is a good tool to do that.

Scott Nelson  36:29  
That's a great point to conclude our conversation. CJ, thank you very much for your time and sharing your thoughts and experiences today. I really appreciate it.

Carolyn Johnsen  36:36  
Thanks, Scott. Thanks for having me.

Scott Nelson  36:42  
Thank you for listening to The Risky Health Care Business Podcast. You can listen to all episodes from the resource center page of the SpringParker website, springparker.com, or click the Listen link in the show notes to listen and subscribe for free on your platform of choice. And remember, accelerating health care performance is achieved through creativity, not just productivity.